Takata and the automakers – will the ties last?

A Japanese supplier, Takata Corp. has become world famous because of its involvement into a huge recall scandal that covered airbags with potentially defective inflators installed in models of numerous brands.

The world’s second-largest supplier of auto safety systems, Takata – has its deepest ties with Toyota, Honda and the other Japanese manufacturers. But its faulty airbags have also landed in BMW, GM, Ford and Chrysler cars and the NHTSA has said that around 7.8 million cars are at risk in high humidity regions. Because of the explosive used to power the inflator and quality control issues at its manufacturing plant in Mexico, Takata produced airbags could explode and pieces of metal could be sent flying through the cabin at high velocity.

So far, the recalls have been tied to four fatalities in the US, but given the sheer cost and disruption of such a decision, Takata is unlikely to be discarded as a supplier by its automotive clients. Executives from both Honda and Toyota – its largest clients – have already dismissed rumors of such decisions. But that could change.

Scott Upham, a former executive at Takata and at third-ranked TRW Automotive, now president of Valient Market Research thinks the Japanese supplier would move quietly – in a typical Japanese manner – and make it up to the automakers in time. On the other hand, contracts for future model designs – now only on the designer’s board – could be awarded to other suppliers if the recalls are widened. So far, the 7.8 million cars have been recalled regionally, but now three Democratic senators are vying for a countrywide campaign. That would add at least 5.3 million new cars to the tally.